Likely narrow GOP House majority may jeopardize Trump’s tax cuts, Raymond James says

November 12

Republicans are nearing a sweep in Congress, but Raymond James says that it won’t be easy for President-elect Donald Trump to sign off on the legislation he wants — including the tax cuts that were part of his platform. As of Tuesday afternoon, Republicans secured 215 seats in the House of Representatives compared with the Democrats’ 206, according to NBC News. The Republican Party will have control of the Senate , with 52 seats versus the Democrats’ 47, but the GOP’s margin in the House is looking notably narrow this time, according to Raymond James’ Washington policy analyst, Ed Mills. “In 2025, Trump’s influence on Congressional Republicans will be stronger but his margin in the House will be in the single digits (down from 47 in 2017). … The narrow House majority will complicate the passage of any tax bill in 2025,” he said. Mills said the GOP is expected to use the budget reconciliation process to pass any of President-elect Trump’s tax proposals. However, even when the party held its wide House majority in 2017, he noted that 13 Republicans voted against then-President Trump’s proposed tax cuts due to disagreements over a $10,000 limit on the state and local tax, or SALT, deduction. That measure, known as the Tax Cuts and Jobs Act , ultimately passed and went into effect in 2018. However, a slate of provisions are expected to sunset at the end of 2025 , setting the table for talks in Washington on how to extend the tax breaks . One point of discussion as to how to fund tax cuts this time around has been to repeal the Inflation Reduction Act, which is another likely point of contention, Mills added. “The narrow margins will make this more difficult, especially given the number of Congressional Republicans with IRA-funded projects in their districts,” the analyst said. In order to keep GOP lawmakers from defecting on the tax bill, legislators may seek compromises on the SALT deduction, tariffs or changes to Medicaid, according to Mills. Wolfe Research analyst Tobin Marcus also thinks passing a tax bill is a “complex challenge” with such narrow majorities across the House and the Senate. “The Congressional negotiations over this package will be complex, so there will absolutely be wrinkles we don’t expect here. But we think the hefty price tag for extending expiring individual tax provisions past EOY25 will sharply limit how much incremental tax cutting Republicans can do, and will compel them to include some real offsets despite reluctance from some parts of their coalition,” Marcus wrote in a research note Tuesday.

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